Question:
Our company intends to dismiss a member of the Board of Directors, but the company's charter does not provide any provisions for dismissal. Specifically, in this case, the Board member has not committed any violations, is still serving their term, and has not submitted a resignation letter. How can we proceed to dismiss this Board member?
Answer:
According to Article 160 of the Law on Enterprises 2020, the General Meeting of Shareholders may dismiss a member of the Board of Directors in the following cases:
a) The member no longer meets the standards and conditions specified in Article 155 of this Law;
b) The member submits a resignation letter which is accepted;
c) Other cases as provided in the company’s charter.
To dismiss a member of the Board of Directors, it is necessary to examine whether the member meets the standards and conditions specified in Article 155 of the Law on Enterprises 2020.
Article 155: Structure, Standards, and Conditions for Members of the Board of Directors
- Members of the Board of Directors must meet the following standards and conditions:
a) Not falling into the categories specified in Clause 2, Article 17 of this Law;
b) Possessing professional qualifications and experience in business management or in the field, industry, or profession of the company’s business and not necessarily being shareholders of the company unless otherwise provided in the company’s charter;
c) A member of the Board of Directors may simultaneously be a member of the Board of Directors of another company;
d) For state-owned enterprises as specified in Point b, Clause 1, Article 88 of this Law and subsidiaries of state-owned enterprises as specified in Clause 1, Article 88 of this Law, members of the Board of Directors must not be related to the General Director, other managers of the company, or to the manager or the person authorized to appoint the manager of the parent company.
If the Board member does not meet the conditions specified in Article 155 of the Law on Enterprises 2020, the General Meeting of Shareholders may dismiss them pursuant to Point c, Clause 2, Article 138 of the Law on Enterprises 2020.
Article 138: Rights and Duties of the General Meeting of Shareholders
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2. The General Meeting of Shareholders has the following rights and duties:
c) To elect, dismiss, and remove members of the Board of Directors and Supervisory Board;
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Thus, it is necessary to first examine whether the conditions for dismissing a Board member are met. If the conditions are satisfied, the company may convene and organize a General Meeting of Shareholders to proceed with the dismissal.
